For trading/longevity purposes, anything under $100M in AUM is generally problematic. The largest ETF ever shuttered had just over $100M in AUM so anything over the $200-300M level is totally safe in terms of longevity. With $480M and $540M in AUM, both of these funds are more than find in terms of having a 0% risk of closure. In terms of spreads, both of these funds are in the top third in terms of tightness of spreads. As this portfolio isn't meant to be regularly traded in and out of, this is more than sufficient for our purposes here.

PLW is equally weighted between all Treasury maturities (1-30 years). This is the huge advantage of this fund over similar broad Treasury funds. It provides complete exposure to the entire yield curve without taking active bets on various maturity ranges. Its performance this year vs. closest competitor GOVT (it outperformed by 1,000 bps), which underweights long-term Treasuries, is a great example of why investors want to avoid active bets and instead cover as broad a range of investable markets across as many asset classes as possible.

In terms of RWO, you make a very valid point - one that will be considered in future iterations of this portfolio as it does offer much more global exposure to the REIT sector.

Finally, regarding DBC, the diversification benefit of adding in commodities is significant over time as they tend to have very different betas than both stocks and bonds. That said, this is really just a general recommendation. If you have a combination of funds that you feel can provide a better long-term diversification effect, then by all means go for it.

All the best,Jonathan]]>
Sun, 21 Dec 2014 05:42:58 -0500Some good original points you raise here. I'll try and answer one by one.

For trading/longevity purposes, anything under $100M in AUM is generally problematic. The largest ETF ever shuttered had just over $100M in AUM so anything over the $200-300M level is totally safe in terms of longevity. With $480M and $540M in AUM, both of these funds are more than find in terms of having a 0% risk of closure. In terms of spreads, both of these funds are in the top third in terms of tightness of spreads. As this portfolio isn't meant to be regularly traded in and out of, this is more than sufficient for our purposes here.

PLW is equally weighted between all Treasury maturities (1-30 years). This is the huge advantage of this fund over similar broad Treasury funds. It provides complete exposure to the entire yield curve without taking active bets on various maturity ranges. Its performance this year vs. closest competitor GOVT (it outperformed by 1,000 bps), which underweights long-term Treasuries, is a great example of why investors want to avoid active bets and instead cover as broad a range of investable markets across as many asset classes as possible.

In terms of RWO, you make a very valid point - one that will be considered in future iterations of this portfolio as it does offer much more global exposure to the REIT sector.

Finally, regarding DBC, the diversification benefit of adding in commodities is significant over time as they tend to have very different betas than both stocks and bonds. That said, this is really just a general recommendation. If you have a combination of funds that you feel can provide a better long-term diversification effect, then by all means go for it.

All the best,Jonathan]]>
ETF Investing Guide: A Core ETF Portfoliohttp://seekingalpha.com/article/15243/comments?source=feed#comment-45111675
45111675BSV is an interesting suggestion. It holds both U.S. govt. and i-grade corporates with maturities of 1-5 years. Many of those same bond issues are also held by LQD and PLW and so adding it to this portfolio would be redundant. In terms of replacing those funds with BSV, it is true that BSV is a bit cheaper than LQD and PLW but if one is looking for exposure to the entire yield curve, they would need to also hold BSV's companion funds, BIV and BLV. This would also remove your ability to rebalance between corporates and Treasuries.

Hope that helps,Jonathan]]>
Thu, 18 Dec 2014 17:27:27 -0500BSV is an interesting suggestion. It holds both U.S. govt. and i-grade corporates with maturities of 1-5 years. Many of those same bond issues are also held by LQD and PLW and so adding it to this portfolio would be redundant. In terms of replacing those funds with BSV, it is true that BSV is a bit cheaper than LQD and PLW but if one is looking for exposure to the entire yield curve, they would need to also hold BSV's companion funds, BIV and BLV. This would also remove your ability to rebalance between corporates and Treasuries.

Hope that helps,Jonathan]]>
Creating The Perfect Bond ETF Portfoliohttp://seekingalpha.com/article/2660795/comments?source=feed#comment-43054905
43054905Mon, 10 Nov 2014 05:53:09 -0500Creating The Perfect Bond ETF Portfoliohttp://seekingalpha.com/article/2660795/comments?source=feed#comment-43054885
43054885Mon, 10 Nov 2014 05:51:56 -0500Eaton Vance up almost 10% as SEC approves new type of ETFhttp://seekingalpha.com/news/2108385?source=feed#comment-43054825
430548251) They haven't received final approval yet - investors have until 12/1 to file a formal complaint with the SEC. All they've received so far is a 'letter of intent'

2) The once-a-day trading mechanism still requires 2 things - SEC approval and exchanges to adopt it. These may take somewhat longer than the fund structure approval

3) These funds shouldn't give ETFs a bad name because of several key differences:

A) They will be called ETMFsB) They trade only once a day via a somewhat bizarre trading mechanism where traders enter 'NAV +$1' or 'NAV -$1' and the trade then settles after hours. Unlike ETFs, these funds DO NOT trade intradayC) Active managers are (rightly) concerned about front-running. These funds are non-transparent, unlike ETFs which are fully transparent, and thus investors are still betting on a manager - not an asset class or rules-based strategy as they are with ETFs.

4) The similarities to ETFs make these funds better than mutual funds in my opinion:

A) Since they are still exchange-traded, the issuer avoids 12b-1 fees and thus fees should be lower than those of traditional actively managed mutual funds. Since the main reason actively managed funds underperform their passive equivalents is higher fees, this should help close the performance gap (though the underlying trading fees should still keep overall performance worse than passively managed funds on the whole)

B) hese will not be treated like pooled investments and so they should nearly always be more tax efficient than comparable mutual funds

C) They will use the same creation/redemption mechanism ETFs use and so pricing should remain very close to NAV

Hope that clarifies things somewhat.]]>
Mon, 10 Nov 2014 05:44:59 -05001) They haven't received final approval yet - investors have until 12/1 to file a formal complaint with the SEC. All they've received so far is a 'letter of intent'

2) The once-a-day trading mechanism still requires 2 things - SEC approval and exchanges to adopt it. These may take somewhat longer than the fund structure approval

3) These funds shouldn't give ETFs a bad name because of several key differences:

A) They will be called ETMFsB) They trade only once a day via a somewhat bizarre trading mechanism where traders enter 'NAV +$1' or 'NAV -$1' and the trade then settles after hours. Unlike ETFs, these funds DO NOT trade intradayC) Active managers are (rightly) concerned about front-running. These funds are non-transparent, unlike ETFs which are fully transparent, and thus investors are still betting on a manager - not an asset class or rules-based strategy as they are with ETFs.

4) The similarities to ETFs make these funds better than mutual funds in my opinion:

A) Since they are still exchange-traded, the issuer avoids 12b-1 fees and thus fees should be lower than those of traditional actively managed mutual funds. Since the main reason actively managed funds underperform their passive equivalents is higher fees, this should help close the performance gap (though the underlying trading fees should still keep overall performance worse than passively managed funds on the whole)

B) hese will not be treated like pooled investments and so they should nearly always be more tax efficient than comparable mutual funds

C) They will use the same creation/redemption mechanism ETFs use and so pricing should remain very close to NAV

Hope that clarifies things somewhat.]]>
Update: Schwab Offers 6 WisdomTree ETFs To Online Traders With $0 Commissionshttp://seekingalpha.com/article/2506885/comments?source=feed#comment-40424465
40424465Having raised this point with other issuers (not WisdomTree) who have their ETFs available commission-free on multiple discount brokerage platforms, my sense is that the issuers pay the discount brokers next to nothing - or nothing - to be included commission-free.

What then is in it for the deep-discount brokers like Schwab then and why would they agree to waive the $10 commission (or whatever it is) every time buys or sells on of these funds?

A couple of things from what I understand: 1) The ability to gather additional assets - or avoid bleeding assets to competitors that are offering large numbers of ETFs commission-free. Commission-free ETFs are a big draw these days - but most investors don't hold ETFs alone. They still buy and sell stocks, bonds, options, CEFs and more offering plenty of commissions to the discount brokers. Additionally, investors keep large amounts of cash in their brokerage accounts - which these days often serve the dual function of also being checking accounts, paying bills online, etc. And the discount brokers pay next to nothing on the cash parked in accounts so this is another source of income that comes from simply getting people in the door.

2) Securities lending - this is a biggie. The more shares being custodianed on your platform, the more money a broker stands to make by lending them out to short sellers. Securities Lending is a standard line item on all publicly traded discount broker 10-ks (see here for TD Ameritrade as 1 example: http://buswk.co/1uZPuGZ)

This explains why we're seeing larger and larger numbers of ETFs becoming available commission-free across multiple discount brokerage platforms. It's a win-win-win: The ETF issuers get to grow assets as a faster pace, the brokers have done the math and figured out that even giving up the $7-$10 commission to trade these shares, it's still well worth their while for the reasons I've outlined above, and most importantly (to us investors at least), the little guy saves a small fortune in trading and rebalancing fees. ]]>
Fri, 19 Sep 2014 09:12:55 -0400Having raised this point with other issuers (not WisdomTree) who have their ETFs available commission-free on multiple discount brokerage platforms, my sense is that the issuers pay the discount brokers next to nothing - or nothing - to be included commission-free.

What then is in it for the deep-discount brokers like Schwab then and why would they agree to waive the $10 commission (or whatever it is) every time buys or sells on of these funds?

A couple of things from what I understand: 1) The ability to gather additional assets - or avoid bleeding assets to competitors that are offering large numbers of ETFs commission-free. Commission-free ETFs are a big draw these days - but most investors don't hold ETFs alone. They still buy and sell stocks, bonds, options, CEFs and more offering plenty of commissions to the discount brokers. Additionally, investors keep large amounts of cash in their brokerage accounts - which these days often serve the dual function of also being checking accounts, paying bills online, etc. And the discount brokers pay next to nothing on the cash parked in accounts so this is another source of income that comes from simply getting people in the door.

2) Securities lending - this is a biggie. The more shares being custodianed on your platform, the more money a broker stands to make by lending them out to short sellers. Securities Lending is a standard line item on all publicly traded discount broker 10-ks (see here for TD Ameritrade as 1 example: http://buswk.co/1uZPuGZ)

This explains why we're seeing larger and larger numbers of ETFs becoming available commission-free across multiple discount brokerage platforms. It's a win-win-win: The ETF issuers get to grow assets as a faster pace, the brokers have done the math and figured out that even giving up the $7-$10 commission to trade these shares, it's still well worth their while for the reasons I've outlined above, and most importantly (to us investors at least), the little guy saves a small fortune in trading and rebalancing fees. ]]>
Introducing Seeking Alpha's New ETF Hubhttp://seekingalpha.com/article/2302445/comments?source=feed#comment-36825795
36825795Fri, 11 Jul 2014 04:59:35 -0400Introducing Seeking Alpha's New ETF Hubhttp://seekingalpha.com/article/2302445/comments?source=feed#comment-36709185
36709185Wed, 09 Jul 2014 07:16:35 -0400Introducing Seeking Alpha's New ETF Hubhttp://seekingalpha.com/article/2302445/comments?source=feed#comment-36709145
36709145As a regular ETF investor, I totally agree. ETF.com in particular offers an incredible amount of free ETF data. From that pure 'quantitative' perspective their screener is clearly the best. We knew we could never one-up sites like ETF.com on that count.

What we decided to focus on here is something I haven't seen elsewhere: A screener that combines quantitative data, qualitative 'deep dive' analysis and full portfolio integration including real-time alerts that allow you to never miss key news or analysis on one of your holdings.

While I appreciate good quant analysis as much as the next guy, the issues with purely quantitative screeners have been pointed out already, here for example in daniel Kim's 'Do Stock Screens Really Work' (http://seekingalpha.co...).

Data-only screeners are a great starting point. But the investing endgame involves a whole lot of qualitative analysis and ongoing due diligence. We feel our new ETF Hub brings investors much closer to being successful long-term ETF investors than any other site that at least i've seen to date.]]>
Wed, 09 Jul 2014 07:14:58 -0400As a regular ETF investor, I totally agree. ETF.com in particular offers an incredible amount of free ETF data. From that pure 'quantitative' perspective their screener is clearly the best. We knew we could never one-up sites like ETF.com on that count.

What we decided to focus on here is something I haven't seen elsewhere: A screener that combines quantitative data, qualitative 'deep dive' analysis and full portfolio integration including real-time alerts that allow you to never miss key news or analysis on one of your holdings.

While I appreciate good quant analysis as much as the next guy, the issues with purely quantitative screeners have been pointed out already, here for example in daniel Kim's 'Do Stock Screens Really Work' (http://seekingalpha.co...).

Data-only screeners are a great starting point. But the investing endgame involves a whole lot of qualitative analysis and ongoing due diligence. We feel our new ETF Hub brings investors much closer to being successful long-term ETF investors than any other site that at least i've seen to date.]]>
Introducing Seeking Alpha's New ETF Hubhttp://seekingalpha.com/article/2302445/comments?source=feed#comment-36662225
36662225All the best,Jonathan]]>
Tue, 08 Jul 2014 10:32:28 -0400All the best,Jonathan]]>
Introducing Seeking Alpha's New ETF Hubhttp://seekingalpha.com/article/2302445/comments?source=feed#comment-36662125
36662125Tue, 08 Jul 2014 10:30:47 -0400Introducing Seeking Alpha's New ETF Hubhttp://seekingalpha.com/article/2302445/comments?source=feed#comment-36653625
36653625I had linked to the ETF Hub a couple of times in the piece but here's that link again: http://bit.ly/1jb8qkS

Best,Jonathan]]>
Tue, 08 Jul 2014 08:30:16 -0400I had linked to the ETF Hub a couple of times in the piece but here's that link again: http://bit.ly/1jb8qkS

Best,Jonathan]]>
A New Frontier For This ETFhttp://seekingalpha.com/article/2232433/comments?source=feed#comment-34536783
34536783Disclosure: Long FM (for roughly the last 8 months).]]>
Thu, 22 May 2014 07:25:08 -0400Disclosure: Long FM (for roughly the last 8 months).]]>
It's Time To Buy This 3x Leveraged Gold Mining ETFhttp://seekingalpha.com/article/2229803/comments?source=feed#comment-34533443
34533443Thu, 22 May 2014 02:50:59 -0400Why Dividends Matter: A Review Of Recent Researchhttp://seekingalpha.com/article/2065383/comments?source=feed#comment-30871873
30871873Tue, 04 Mar 2014 12:48:35 -0500Why Dividends Matter: A Review Of Recent Researchhttp://seekingalpha.com/article/2065383/comments?source=feed#comment-30854423
30854423Tue, 04 Mar 2014 08:50:12 -0500Crisis In Ukraine: What It Means For U.S. Stockshttp://seekingalpha.com/article/2061733/comments?source=feed#comment-30787913
30787913I wouldn't be surprised if we turn around in 15 or 20 years to 'discover' that Putin has retaken half the territory ceded since the break-up of the USSR. #whosaysthecoldwarended]]>
Mon, 03 Mar 2014 03:21:31 -0500I wouldn't be surprised if we turn around in 15 or 20 years to 'discover' that Putin has retaken half the territory ceded since the break-up of the USSR. #whosaysthecoldwarended]]>
ETFs Are Not What You Think They Arehttp://seekingalpha.com/article/1955021/comments?source=feed#comment-29005631
29005631Mon, 27 Jan 2014 15:21:56 -0500Replicating Yale's Endowment Portfolio With Accessible Instrumentshttp://seekingalpha.com/article/1968721/comments?source=feed#comment-29005151
29005151Mon, 27 Jan 2014 15:16:21 -0500Gary Gordon Positions For 2014: Sticking With ETFs Capable Of Handling Deflationary Scareshttp://seekingalpha.com/article/1924031/comments?source=feed#comment-27850371
27850371I understand your sentiment but as an RIA, people like Gary Gordon build client accounts one at a time, based on their individual needs. How then can he report on results in a broad and sweeping fashion? Every portfolio is different and every set of financial needs is different too.

Jonathan]]>
Fri, 03 Jan 2014 06:30:01 -0500I understand your sentiment but as an RIA, people like Gary Gordon build client accounts one at a time, based on their individual needs. How then can he report on results in a broad and sweeping fashion? Every portfolio is different and every set of financial needs is different too.

It's one of Rob Arnott's fundamental index funds which weights holdings according to a mix of book value, cash flow, sales and dividends and charges 39 bps. It's up roughly 40.5% YTD on a total return basis so somewhat ahead of BOSVX and BOTSX.

The spread to trade it seems reasonable as it has close to $1B AUM. Seems like it would be a good substitute for those Bridgeway funds in the Larry Portfolio if one were so inclined. ]]>
Thu, 26 Dec 2013 08:59:52 -0500PRFZ is the RAFI Small-Mid Portfolio: http://bit.ly/18MHD9a

It's one of Rob Arnott's fundamental index funds which weights holdings according to a mix of book value, cash flow, sales and dividends and charges 39 bps. It's up roughly 40.5% YTD on a total return basis so somewhat ahead of BOSVX and BOTSX.

The spread to trade it seems reasonable as it has close to $1B AUM. Seems like it would be a good substitute for those Bridgeway funds in the Larry Portfolio if one were so inclined. ]]>
Larry Swedroe Positions For 2014: Risky Equities Always Trump Chasing Yieldhttp://seekingalpha.com/article/1912191/comments?source=feed#comment-27513131
27513131For investors that want to do it themselves, good for them. We certainly encourage that here at SA. However not everyone has the time or inclination to do so. Which is where financial services firms come in. The assumption that these firms are simply gauging unwitting consumers doesn't give the consumer enough credit. My bet is that most high net worth individuals are more than happy to pay someone else 50 to 100 basis points to manage their investments if it means less headaches and more time to themselves.

What's wrong with that?]]>
Tue, 24 Dec 2013 15:16:06 -0500For investors that want to do it themselves, good for them. We certainly encourage that here at SA. However not everyone has the time or inclination to do so. Which is where financial services firms come in. The assumption that these firms are simply gauging unwitting consumers doesn't give the consumer enough credit. My bet is that most high net worth individuals are more than happy to pay someone else 50 to 100 basis points to manage their investments if it means less headaches and more time to themselves.

What's wrong with that?]]>
Positioning For 2014: Guide To The Serieshttp://seekingalpha.com/article/1912481/comments?source=feed#comment-27496051
27496051Thanks for reading and Happy Holidays!]]>
Tue, 24 Dec 2013 09:49:44 -0500Thanks for reading and Happy Holidays!]]>
The Right Time For DoubleLinehttp://seekingalpha.com/article/1891961/comments?source=feed#comment-26933961
26933961I just completed most of mine as well.

Great piece guy and tons of food for thought here - I'm definitely adding this to my watchlist for my parents' account. ]]>
Wed, 11 Dec 2013 14:01:04 -0500I just completed most of mine as well.

Great piece guy and tons of food for thought here - I'm definitely adding this to my watchlist for my parents' account. ]]>
Generex: A Stock Suitable Only For Its Officers And Directors Or Carl Icahnhttp://seekingalpha.com/article/1871221/comments?source=feed#comment-26533251
26533251We have edited the piece to reflect your concerns.